There are many indications that the official business statistics, as produced by the Office of National Statistics (ONS), are no longer fit for purpose. Possibly the strongest evidence for that assertion is the manner in which the Office for Budgetary Responsibility has consistently under-estimated tax returns and over-estimated future government borrowing requirements.
However, the value of more reliable data is not limited to the treasury alone, for example:
Primarily, we attribute the source of error in current methods to be a failure to record the economic contribution of the so-called gig economy, which is predominantly internet driven/enabled and thus able to develop faster than start-up businesses were ever able to in the past. The result is that the reliance on traditional measurement methods yields results that are missing more and more of the growing economy.
We further hypothesise that, as suggested by Professor Bean in his Independent Review of Economic Statistics, the main source of this error lies with the measurement of the economic contribution of the small and very small ’business’ universe and one of our primary objectives is to investigate that sector with survey designs that more appropriate for these more modern enterprises.
In short: because there is currently no reliable source of business data covering the whole UK business community in a consistent and reliable manner, we propose to develop an independent Business Monitor which:
Such an independent monitor will enable us to re-calibrate UK business statistics and improve economic forecasting, making it fit for the modern business world.
The 3 primary requirements for success of the program are:
In essence we are proposing to use a number of different sample sources to provide a single estimation procedure using inverse probability methods to integrate the results by mingling the data from various sources, noting that, on occasion, a response might be obtained from More than one data source. The two primary data sources can be characterised as, firstly, a traditional business sample source (e.g. the Dun & Bradstreet’s business file) and, secondly, a consumer sample using a combination of online invitation and short telephone survey of the general population..
A primary longer term objective will be to monitor the so-called GIG-GEL FACTOR being the ratio of the rate of growth of the gig economy to the rate of growth of the traditional ‘real’ economy. The resultant Key Performance Indicator for the regions will be an index comparing their Gig-gel factor to the National Average; thus a figure in excess of 100 will indicate a relatively larger gig economy for that region. In time this KPI can be extended to smaller areas than regions. Indeed if any town or city has an interest in understanding their Gig-gel factor this Autumn then we can arrange a special ‘boost’ sample for that area to provide the necessary estimate.
Much of the necessary methodology has been pre-tested but we are now planning a full scale pilot to determine the future optimum design of the monitor. This will comprise 4 main elements:
This work is planned for September / October.
There are, of course, an extensive series of business studies produced each year by the ONS, none of which provide the comprehensive single source data we propose. In addition to this source there are a number of Business Monitors and reports as provided by the various business organisations, primarily through ‘polling’ their own members – CBI, FPB, FSB, IoD, BCC, ICAEW, ICC, RICS, CIPS and CIPD.
However, these are all characterised by the manner in which they are restricted to reporting ‘opinion poll’ percentage changes and those only at the national level. Also none of them cover the whole of the UK’s business community in a statistically reliable manner. Indeed all current surveys are based upon relatively small numbers and are NOT ‘projectable’ even to that part of the business universe that they represent.
Presently the Chartered Institute of Purchasing & Supply (CIPS) monthly PMI reports are considered to be the most authoritative available, insofar as they are occasionally mentioned by the Bank of England Monetary Policy Committee (MPC). However, they do NOT cover the whole economy in the manner we propose. Indeed the coverage of the traditional economy is not really representative since the Institute membership is less than 60,000 persons, compared with over 1.7 million VAT registered businesses.
Other membership, professional or other bodies, such as the ICAEW, ICC, RICS, CIPS and CIPD also collect data from members. Although statistically reliable, the resultant data bears little relationship to the UK economy as whole. For example the RICS (Royal Institute of Chartered Surveyors), look at the economy at a general level but focus on their own sphere of activity: namely – property. Similarly, the CIPD (Chartered Institute of Personnel and Development) concentrate on employment issues only.
Finally, the British Chambers of Commerce (BCC) produces a quarterly survey which they claim is the largest and most representative independent business survey, even so it cannot claim to be truly representative of the totality of UKPLC.
 Published 2016 – see https://www.gov.uk/government/publications/independent-review-of-uk-economic-statistics-final-report/press-notice-take-economic-statistics-back-to-the-future-says-charlie-bean )
 GIG-GEL for Gig – Generating Economic Lift